{"id":28279,"date":"2024-03-22T09:11:58","date_gmt":"2024-03-22T13:11:58","guid":{"rendered":"https:\/\/capital10x.com\/old\/?p=28279"},"modified":"2024-03-22T12:20:15","modified_gmt":"2024-03-22T16:20:15","slug":"nickels-supply-side-sorrows-are-overstated","status":"publish","type":"post","link":"https:\/\/capital10x.com\/old\/nickels-supply-side-sorrows-are-overstated\/","title":{"rendered":"Nickel&#8217;s Supply Side Sorrows Are Overstated"},"content":{"rendered":"<p>If you looked at recent articles covering the nickel market, you would think the cycle has run its course and the forecasted tailwinds for the nickel industry from the production of electric vehicles (EVs) has sorely missed expectations.<\/p>\n<p>At the time of this writing, nickel prices have fallen to $15,920\/ton, the lowest level since January 5<sup>th<\/sup>, close to prices not seen since November 2020. On the supply side large operators like <strong>First Quantum Ltd. (TSX: FM)<\/strong> and <strong>BHP Group<\/strong> are shutting parts of their operations in Western Australia and cutting the workforce due to prices pressures.<\/p>\n<p>However, there are silver linings everywhere on the demand side, if you simply know where to look.<\/p>\n<h3><strong>Good News in North America: Demand Growth Continues <\/strong><\/h3>\n<p>Despite the slump in nickel prices and construction halts by global producers, major consumers continue to invest in domestic (North American) supplies. In Q1 2002, <strong>Telsa (NASDAQ: TSLA) <\/strong>announced that they signed an agreement with <strong>Talon Metals<\/strong> (<strong>TSX: TLO) (OTC: TLOFF)<\/strong> to produce 75,000 mt (165 million lbs) of nickel concentrate for the company. Talon is one of 20 grant recipients from the U.S Department of Energy\u2019s $2.8 billion bid to increase domestic manufacturing of materials for lithium batteries and renewable energy.<\/p>\n<p>Talon received US $114 million to build a nickel processing plant in North Dakota.<\/p>\n<p>In Q4 2022, <strong>Vale Canada<\/strong> and <strong>GM (NYSE: GM)<\/strong> signed a long-term agreement to supply battery grade nickel sulphate to support domestic EV production. The nickel will be used in GM\u2019s Ultium battery cathodes, with the goal of first deliveries to start in 2026.<\/p>\n<p>Last year, the Canadian Feds outbid their U.S counterparts; investing CAD $16.3 billion (US $12.5 billion) in <strong>Volkswagen\u2019s<\/strong> EV battery plant, the first of its kind in North America. The U.S and Canada have placed their bets &#8211; that the benefits of the infrastructure\/supply chain buildout and job creation will more than offset the large sums of capital spent of these projects. Its also a wager that forecasted demand for EVs will require a large amount of nickel (i.e. 1.5 million tonnes of nickel per year by 2030) \u2013 and a significant part of that demand can be met by domestic supplies.<\/p>\n<h3><strong>EV Batteries: Without Nickel There is No Battery Revolution<\/strong><\/h3>\n<p>Nickel is a key metal in lithium-ion (Li-ion) batteries, the most used battery for EVs. In the past, the typical Li-ion battery consisted of about 30% nickel. As chemistries have changed, the most recent Li-ion batteries have replaced cobalt in favor of nickel cathodes, due to their relatively cheaper price, higher energy density and increased vehicle range.\u00a0 Most cathodes now contain about 80% <a href=\"https:\/\/www.nasdaq.com\/articles\/auto-biggies-gear-up-to-secure-nickel-supply-amid-ev-boom\">nickel<\/a>.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-28280\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Todays-Battery-Options-August-2023.jpg\" alt=\"\" width=\"897\" height=\"285\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Todays-Battery-Options-August-2023.jpg 897w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Todays-Battery-Options-August-2023-300x95.jpg 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Todays-Battery-Options-August-2023-768x244.jpg 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Todays-Battery-Options-August-2023-696x221.jpg 696w\" sizes=\"auto, (max-width: 897px) 100vw, 897px\" \/><\/p>\n<p>As battery technology improves, the push for increased efficiency makes nickel an increasingly important metal for EV battery manufacturing.<\/p>\n<figure id=\"attachment_28282\" aria-describedby=\"caption-attachment-28282\" style=\"width: 1543px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-28282\" src=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg.png\" alt=\"\" width=\"1543\" height=\"917\" srcset=\"https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg.png 1543w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg-300x178.png 300w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg-1024x609.png 1024w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg-768x456.png 768w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg-1536x913.png 1536w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg-696x414.png 696w, https:\/\/capital10x.com\/old\/wp-content\/uploads\/2024\/02\/Nickel-Content-of-batteries-Bloomberg-1392x827.png 1392w\" sizes=\"auto, (max-width: 1543px) 100vw, 1543px\" \/><figcaption id=\"caption-attachment-28282\" class=\"wp-caption-text\">Source: Bloomberg, NEF<\/figcaption><\/figure>\n<h3><strong>Strategic Investments from Powerful Producers<\/strong><\/h3>\n<p>Global international resource companies are also buying in to the future of nickel mining in North America. In 2022, Australia\u2019s <strong>Wyloo Metals Pty Ltd.<\/strong> spent CAD $600 million to acquire Noront Resources Ltd., which owned the Eagle\u2019s Nest nickel project in Ontario\u2019s Ring of Fire district. At the time of this writing, Sumitomo Metal Mining Canada Ltd. a subsidiary of Sumitomo Metal Mining Inc. (TSE: 5713) \u00a0\u00a0\u00a0has provided CAD $14.4 million investment to acquire a stake in FPX Nickel Corp. (TSXV: FPX) (OTCQB: FPOCF).<\/p>\n<p>Toronto\u2019s <strong>Canada Nickel Company Inc.<\/strong> <strong>(TSXV: CNC) (OTCQX: CNIKF)<\/strong> announced US$18.5 million in equity financing from Korean EV battery maker Samsung SDI Co., Ltd.<\/p>\n<p>The company is developing a list of strategic investors, with <strong>Agnico Eagle Mines Limited (NYSE: AEM) (TSX: AEM) <\/strong>and <strong>Anglo American<\/strong> <strong>(LSE: AAL.L) <\/strong>in the Crawford project.\u00a0 These are timely investments \u2013 through Canada Nickel, Agnico expands its substantial gold portfolio into the demand-driven nickel space. Anglo America strengthens its declining global nickel resource, and gains exposure to Canada outside of its diamond holdings. Samsung SDI Co., like Tesla, and other companies down the EV\/battery supply chain have a keen eye on acquisitions to secure their access to the raw materials.<\/p>\n<p>Clearly, the dual themes of Net Zero and the energy transition are dictating global business and policy.<\/p>\n<p>Canada Nickel has grand ambitions. Their plan to build a huge open-pit nickel and cobalt mine in Timmins, Ontario called the Crawford project, would become a major centre for nickel production and potentially the world\u2019s largest nickel sulphide district.<\/p>\n<p>The company understands that its growing list of investors makes them an attractive acquisition prospect for a major. CEO, Mark Selby referred to the scenario in a recent interview with the Globe &amp; Mail:<\/p>\n<div class=\"su-quote su-quote-style-default su-quote-has-cite\"><div class=\"su-quote-inner su-u-clearfix su-u-trim\">Most of the existing nickel sulphide deposits that have been around for 10 years or more have all been bought up by a major in one way, shape or form.<span class=\"su-quote-cite\">-Mark Selby, CEO, Canada Nickel Ltd<\/span><\/div><\/div><em>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<\/em><\/p>\n<p>Government subsidies will continue to be a boon for the nickel industry.<\/p>\n<p>Canada\u2019s Critical Infrastructure Fund (CMIF) will provide up to CAD $1.5 billion over seven years to support clean energy and transportation projects that drive local demand for the development of domestic critical mineral supply. Canada also announced a 30% tax credit for companies exploring for critical minerals in this year&#8217;s federal budget, directly benefiting Canadian-based companies like Canada Nickel.<\/p>\n<p>A flood of cheap nickel from Indonesia in the near term is driving news headlines of nickel mine closures and low prices for years, giving investors the impression the market is broken.<\/p>\n<p>However when you look past today and focus on strong nickel demand growth for the next 10 years if not longer, the future investment potential of nickel comes into focus.<\/p>\n<p>Mining investment is a game of time horizons. It often takes years for shortages to emerge, but once they do, prices move fast. This is why buying nickel, when newsflow seems like it can&#8217;t get any worse, is a bet that usually pays off.<\/p>\n<p>And in this cycle, investors don&#8217;t even have to take on political risk looking for ideas in emerging markets. They can comfortably invest in nickel producers like Canada Nickel, operating right in their own backyard.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why the media has the outlook for nickel all wrong.<\/p>\n","protected":false},"author":30,"featured_media":25409,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2430],"tags":[2136,890],"class_list":{"0":"post-28279","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-energy-transition-metals","8":"tag-canada-nickel","9":"tag-nickel"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Nickel&#039;s Supply Side Sorrows Are Overstated | Capital 10X<\/title>\n<meta name=\"description\" content=\"Why the media has the outlook for nickel all wrong.\" \/>\n<meta name=\"robots\" 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